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Bought property lately? Might you have a title defect your unaware of?
invite response
2010 Oct 10, 6:34am 1,978 views 4 comments
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There is title insurance to protect you from this. I assume it is required by your lender.
What I've read suggests that the major issue is not so much former owners coming back to haunt the new owners. The biggest problem will be when new owners try to sell in the future and are unable to clear the title search because mers transfers are not legally recognized or verifiable in a title search. As I understand it, only the note holders can legally use the mortgage to take back property for nonpayment. Who is to say that whoever claims to have servicing rights to the mortgage actually represents the note holder(s) in a proceeding. I would agree that once a sale is completed the new owners should receive title. I also believe the person or entity selling to said buyer must be forced to accept responsibility for all title issues occurring before close of escrow. This means the reo sellers insure themselves, and if they can't or the seller's insurance co goes belly up tough luck. Wells practice of passing this onto the buyer should be outlawed.
PockyClipsNow
2010 Dec 17, 3:00am
Robert is right to be very cautious.
If the slip-and-fall attorneys are able to get a new industry up and running based on 'you better give me 20k or we will cloud your title' scam then that is scary. I have seen billboards of attorneys advertising to get foreclosed people to call them.
Its really a gigantic, enourmous issue when 40-50% of the for sale homes are shorts or REO!
HousingWatcher
2010 Dec 17, 7:30am
In an extreme case, it is easy to imagine a former owner calling the cops on you and having you arrested for trespassing if you bought a foreclosure with improper paperwork.
Apparently, the reason tbtf banks are suspending foreclosure activity is because they may have sold properties without clear titles because transfers within MERS. This is serious because if you later sell the prop, you may run into problems with providing clear title to prospective buyers. In addition, former owners may challenge you right of ownership. Wells Fargo thought it serious enough that it drew up an addendum it slides under the buyers nose at closing stating you will not hold wells responsible for possible title issues.
Does anyone have any firsthand experience with these issue? Are there any re attorneys or title co people who could shed further light on this?
#housing